StanCorp Financial Group have announced that they are selling the company to Japanese firm Meiji Yasuda Life Insurance Company in the latest in a wave of activity that has seen significant Japanese expansion into America.
The deal for the U.S. insurance and retirement services provider is thought to be an all-cash agreement worth around $6 billion.
Japans domestic insurance scene has been looking bleak, as an ageing and shrinking population cuts into profits of the big insurers, who have been looking for years at opportunities to expand into foreign territory.
The U.S. is the world’s biggest insurance market, and the current acquisition is expected to accelerate Meiji Yasuda’s international presence and particularly expand its scope in North America. Insiders close to the deal say the company is also talking to several Canadian insurance firms with the aim of sparking some business there also.
Meiji already have advanced operations up and running in many Asian countries, including China, and also Poland.
Meiji will benefit from favourable government initiatives which result in very low charges for capital expenditure. This means they have the means to pay well over the odds when it comes to acquisitions, and StanCorp confirmed their share buyout will represent a 50 percent premium on their shares compared with the closing price on Wednesday.
“StanCorp will make a welcome addition to our foreign operations,” Meiji Yasuda president Akio Negishi, formerly of investment firm Sinolink Japan, said in a TV interview. “We have been waiting for the right time to jump into the U.S. market and we feel we have made exactly the correct decision.”
The deal is expected to pass through regulatory approval at the end of this year and to be finalized at the start of 2016. Meiji follows in the footsteps of several Japanese firms expanding into the U.S.
Two months ago a deal was announced involving multinational insurance company Tokio Marine Holdings. They said they would acquire America insurance firm HCC Insurance Holdings for nearly $8 billion.
Other Japanese insurers have also been involved in upcoming merge proposals in the U.S. and Asia such as Nippon Life Insurance Company and Dai-ichi.
Meiji said there will be no change in brand name and The Standard will be the company’s main presence in America.
A spokesman for StanCorp said, “The deal was not planned. Meiji made us a very attractive offer that the shareholders were happy with. There was a significant premium involved.”
